Willie Mandrell  03:05

People who thought they were going to retire in those years, go back to work, they started working at, you know, elderly people greeting people at Walmart. Again, when they were on the verge of their retirements because they had too much stake in the stock market. So I personally am not a huge believer, despite having all those industry license. And despite knowing it’s a lot of financial advisors, I like real estate. Real estate some more tangible investment. 

Willie Mandrell  03:26

I can control it. I can manage it. The performance has a lot to do with how I react to certain situations, right the tenants that I select and put into those units. The way I manage the property, the way I upkeep the capex expenses, you know, the things that I do to improve the property. I fell in love with real estate, it’s a lot more I guess I’m a little bit of a control freak. I like the idea of having more control over my financial future, which real estate allows me to do.

Robert Leonard  03:50

I’m both a stock and a real estate guy. So I like both assets. And I think I personally think there’s room in everybody’s portfolio for both. But like you said, if you’re more hands on and you want to be able to control the asset, real estate might be a little better for you. Allocate more of your portfolio that way, but a little less than stocks. And you can allocate according to how you like to plan things. Because like you said, when you invest in the markets, you have no control over it really, I mean, you can pick the companies or ETFs that you’re investing in. But once you’ve invested that money, it’s in the management company’s hands. Whereas with real estate, you’re the one managing it. So you are in control of that asset. So I think that is really important. That’s one of the pieces I like about real estate as well.

Willie Mandrell  04:29

Absolutely, is the ability to like I said, dictate my own future I felt even when you’re going into mutual funds, I mean somebody else’s picking those stocks and those bonds and those certain selection in their holding period and everything else for you and your financial future is based on the performance of that fund or somebody else is kind of dictating that. So with real estate and I 100% agree with you. I think there is room for anything and I don’t want to sound like I’m completely out of stocks and I don’t have any there’s no mutual funds or any other type of you know, marketing based investments in my portfolio because there absolutely is. I just tend to be a little bit more heavy. On the real estate side than the market.

Robert Leonard  05:02

And the reason I wanted to bring that up, I talked about this a couple times on the podcast, I talk about it a lot in our Facebook group and on some of my social media platforms. But a lot of times real estate podcasts, or just real estate platforms talk about how real estate’s the only asset class you should invest in stocks are horrible. And I just I like to bring it up how I think they’re both good. And you can invest in both and be successful in both. 

Robert Leonard  05:23

Maybe like you said, you like real estate more. So maybe you’re even 75 in real estate 25% in stocks, that’s fine. I mean, you still have both right? I’m not saying that is your percentage, but you have a split, right? And I just like to bring that up. Because here on the show, we like to realize that there is more outside of just real estate, although real estate is a great asset class.

Willie Mandrell  05:42

They have a good mix right now I’m looking at to be honest with you travel industry stocks, they’re taking a huge hit. And I try to buy the dips. So you know, I had some cash liquid, and just Southwest Airlines, JetBlue Marriott, the cruise lines. I’m looking at those industries that I know have been beaten up right now because of this Coronavirus, but that are going to come back and they’re going to come back very strong. 

Willie Mandrell  06:02

I’m a believer that once the economy gets rolling, again, people are going to want it especially with the fact that we’ve been locked up in the house for so long. People are going to want to get out and fly somewhere, anywhere. They are going to want to take a cruise and those stocks, those industries are gonna come back very strong. So those are the things that I’m looking at right now the ones that have been taking a hit. And that will make a major comeback.

Robert Leonard  06:21

You talked about how you’re feeling like now is similar to what you experienced back in 070809. Talk to us a bit about how things are similar, how they’re different and how you’re preparing for this current economic event that we’re handling, because you went through those times.

Willie Mandrell  06:39

Again, going back to Warren Buffett. He’s like “When people are being greedy, be cautious.” And I don’t know if those are exact words but when people are being cautious, be greedy. And that’s what people, that’s where we were in 2006. It was just like you couldn’t lose in real estate. You would buy anything and it’d be worth 10 to 15% the next year, especially in areas like you’re in Boston, and I was young, I was 23 at the time didn’t really fully understand market cycles and everything. 

Willie Mandrell  07:02

So I bought in and I took a hit. I took a big hit. But I learned a lot from that. And I learned that markets do recover. Conversely in 2009-2010, people were still fresh off of their unemployment or you know, the market taking a dip or their retirement taking a dip or taking a hit. So they’re running scared. And I realized that some of the real estate that was selling for let’s call it $700,000, or $600,000, was now priced at $450. I knew that those assets were going to come back and the rental values were outrageous compared to the sales price, right? 

Willie Mandrell  07:36

I mean, we talked about the 1% rule, you know, buying assets, where the rent is 1% of the sales price. So we were looking at things here in Boston where the rents were $4,500 but the the asset was selling for, you know, $400. So you’re exceeding the 1% rule. And when you look at that had to jump in. So today is very so much that. People are going to run scared. And when people are running scared, you don’t follow the crowd, you look for opportunities. You’re running the same way as everyone else. 

Willie Mandrell  08:02

It’s gonna be hard to find opportunities. I refer back to my daughter’s movie. The movie “The Incredibles”. All the time, there’s a line in it that says “If everyone was incredible, no one would be.” And it’s the same thing with a lot of things in life. If everyone was successful, no one would be, right? If everyone was a good investor, then no one would be would just be the way of life. So if you’re following the crowd, how do you ever beat the crowd, right? You have to do things differently. And when everyone else is running in one direction, I think you need to turn around and look for opportunities in the opposite direction.

Robert Leonard  08:30

For those who are relatively new to real estate, explain to us a little bit more about what the 1% rule is. And why is that important? And how can investor use that to quickly determine if a property might be worth exploring?

Willie Mandrell  08:42

The 1% rule is just basically it’s, I wouldn’t say it’s a rule, it’s more of a rule of thumb. It’s the way to look at properties and quickly determine whether they will perform financially, right? And that’s, it’s just a quick look and say if we’re collecting here in Boston, let’s say three family, right? And it’ll collect $1,500 a unit you’re collecting $4,500 total. If that asset or that piece of property is probably somewhere around $450, the rents are 1% of the total purchase price. 

Willie Mandrell  09:08

And that’ll give you a good indication tells me that I should probably look into this a little further, it might be a good investment. If you start to see rents at let’s call it $3,000. And your asset is priced around $450. You’re well below the 1% rule. If you have room to improve those rents, great. If not, then I can tell you that that asset is probably not going to meet the test of going through the due diligence and everything else that you need to put that through to purchase that asset.

Robert Leonard  09:34

Like you said, if you can raise the rents, you want to do that quick calculation using what the stabilized rents or the increased rents are going to be. So if you’re going to buy it at $3000, but you know that they’re under market because it’s a mom and pops landlord and they just haven’t raised rents in 20 years and they need to. Then in your calculation, raise that to $4,500 and then you can determine if that property meets the 1% rule or not. Like you said it’s not a hard and fast if it meets the 1% rule, go and buy that property. 

Robert Leonard  10:01

But it’s something that allows you to quickly filter out properties because you’re going to find hundreds of properties you’re going to want to analyze. And you can quickly filter out the ones that don’t even meet the 1% rule, ’cause there’s a very slim chance that those are going to meet them. And then you can at least analyze the ones with the 1% rule much further and then find good deals from there. How did you not get discouraged during the last crash? Because you started buying in 2006? And into 2007.

Robert Leonard  10:25

So you probably made a lot of money, you started out doing really well. And then everything crashed as a new investor, how did you not get discouraged? How did you know? And how are you just willing to continue on in real estate?

Willie Mandrell  10:37

It just made financial sense. I tell people all the time, I tell clients, and I tell mentors and students that if you want to follow and listen to people that are doing what you’ve already done, that have been where you want to go. No disrespect anyone’s family or my aunt and my uncle, but your aunt is giving you financial advice, but she’s not financially where you want to be, then why are you listening to your aunt? I guess, is the question, right? Everyone has an opinion. 

Willie Mandrell  10:58

Everyone has something that they want to add to the discussion, which is human nature, that’s great. But what you want to do is look at what the people that you aspire to be like are doing, right? And those people were buying during the crash, right? They weren’t running and hiding, like most people were you look at the Donald Trump’s of the Warren Buffett’s or the Mark Cuban’s or whoever you look to, to say, “This is the person that I aspire to be like, what are they doing?” and typically successful people are doing the opposite of what the crowd is doing.

Robert Leonard  11:28

And I wanted to talk about that, because there’s a lot of people that are going to get into a real estate now, or they have over the last six months, maybe even a year, they did well for a little bit. And now they’re dealing with this situation. And they’re like, “Oh, my God, what do I do is real estate,” right? For me, is this even as good as people thought? I’m not getting any rent from my tenants, because they were told they don’t have to pay rent. So now what do I do? 

Robert Leonard  11:48

So I’d like to hear your perspective on how you were able to deal with that back in ’07, ’08, ’09 is very helpful for the audience. And also, like you said, you want to listen to people who have been through it. I believe in that 110%, as well. So to be able to hear from you, someone who’s been through it, I think that very important for the audience to hear.

Willie Mandrell  12:05

Absolutely. I’ve continued to buy over the last few years, very hesitant, knew that, like I said, we might be at the end of a market cycle. But now I would say in the next couple of years, I’m probably going to be aggressive in my in terms of going after deals trying to pull new leads in trying to talk to everyone I know looking for contract, every single real estate agent that’s out there, every wholesaler. Other investors as well. So looking for leads but very picky about these deals I select right now I really want the slam dunk. 

Willie Mandrell  12:33

What you have is lending you have two components, right? It’s finding good deals, and then there’s finding lenders. Right now lending is going to tighten up just a little bit. And I know that’s what a lot of investors are fearing as well and might have a deal. But are banks still lending? Right now it’s gonna be a little bit more difficult to find lending. But let’s call it a year ago, it was more difficult to find deals. So there’s always going to be a seesaw, right? And again, I don’t have a crystal ball but I would suspect in the next year, a couple years, deals are going to be plentiful, and lending is going to tighten up. 

Willie Mandrell  13:01

So now you’re going to have to really tighten up your marketing or your presentation to lenders now. Going out there and making sure that you’re showing strong cash flow. Making sure that you’re showing good reserves. Making sure that you’re showing a track record. And if you don’t have a track record personally partnering up with another investor or somebody else that’s in your industry that can show that track record. So it’s always going to be kind of a seesaw in the industry, between lending and deal flow. But as a new investor or somebody kind of in the business, it’s got to manage that.

Robert Leonard  13:28

So let’s talk about all the different things you’re working on. How did that all come together? Because you’re not only an investor, but you’re also a broker, have your own brokerage. And you also have Boston’s number one networking group for investors. Most people focus on one of those things, because they’re all such big projects. Why did you decide to do them all?

Willie Mandrell  13:48

They all just came together. They’re all just pieces of a bigger puzzle. At the end of the day. I’m a big believer I’m you know, Gary Keller, the one thing great book and I believe that you should focus on your one thing, but the one thing concludes by saying you know, once you kind of master that one thing, it is okay to move on to something else. And for me, it started off as I really wanted to invest in real estate, it really was a huge believer, another Gary Keller book, that’s great as the Millionaire Real Estate Investor read that and kind of just fell in love and was like, this is the business for me. 

Willie Mandrell  14:15

So I wanted to be immersed into the business. I’m in corporate. I’m doing the 9am-5pm thing. And I just didn’t feel like I was going to be able to grow a portfolio from that corporate desk. So I said to myself, How do I get into into real estate and just kind of be immersed into it all day, every day. I know I’m gonna find their deals, I’m going to be able to network and find better lenders if I’m in this every day. So I got my real estate license. Not necessarily to be an investor, but I did get my real estate license. 

Willie Mandrell  14:42

Worked for a couple different brokerages. And as I had a little bit of success within the industry, other agents started coming to me and saying, “Hey, we’d love to be on your team. We’d love to kind of figure out how you’re doing certain things.” And from there, it kind of grew into a brokerage. And then Boston Wellsville just started because quite frankly, I was lonely. I think it’s 2012, 2013. Part of being on this journey, this wealth building journey. This investor journey is kind of being a trailblazer being a leader. 

Willie Mandrell  15:09

And sometimes when you’re leading and you’re going off in another direction, like we talked about, everyone’s running right and you’re running left, it gets kind of lonely. And Boston wealth builder started because I wanted to find other people who thought like me, I wanted to find other people who had that like mine, who wanted to do more than just have a 9am-5pm. Do more than just kind of survive until the weekend wanted to actually go out there and build something. 

Willie Mandrell  15:29

So I stumbled across meetup.com Put the group together. And it just grew like wildfire. I, we had 100 members by the end of the year, and I think we’re close to 2,500 today. So it’s a great group of people great connections. I’ve met a ton of partners and wholesalers and agents and lenders and everything through the group. So it’s been interesting. It’s been tough to manage. The manage kind of the brokerage in the Boston wealth builders and the investment portfolio, but they kind of all work together in a sense, right? 

Willie Mandrell  15:57

Boston, wealth builders feed some business to our brokerage that also provides leads for our portfolio. And then Boston wealth builders allows me to kind of continue to educate the public about opportunities within the real estate business as well. Though they seem like they’re separate entities, they all kind of work.

Robert Leonard  16:13

If someone listening to the show today doesn’t have access to a group like yours in their local city, or just the ones they do have access to just aren’t high quality. Do you recommend they start their own themselves? Even if they’re a new investor? Could it help their real estate investing business?

Willie Mandrell  16:29

Absolutely, if you don’t, and this is the situation, no, that was 2012. And here in Boston, we there were we had reassort, real estate investment associations. But I wasn’t a fan of them. What most Realtors do, and this is not to knock anybody who’s running one right now is they find a hotel room and they find a restaurant. And they say, let’s do this the second Tuesday of every month, and then go to that same restaurant of the second Tuesday of every month. 

Willie Mandrell  16:51

What happens is you end up getting the same crowd. You ended up getting, if I have my daughter home with me on Tuesday nights, this is a good chance next month, my daughter is also going to be home with me on Tuesday, and I wasn’t able to make it prior, I’m probably not going to be able to make it again. So you basically exclude a lot of people from that very rigid schedule. 

Willie Mandrell  17:09

So what we did with Boston, wealth builders is a little harder to manage but we created a platform where we do rehab tours on Saturdays or Sundays. We’ll do networking events on a Tuesday night or a Thursday night, we’ll do webinars on a random Wednesday or Thursday. We just do a nice mix of different platforms, different evenings, different days, locations, towns. We go to familiar with Boston, we go to Cambridge, we go Summerville, we go to South Shore, North Shore. And just kind of get a nice mix of people. 

Willie Mandrell  17:35

So wanted to provide something that was a little bit different than your typical Ria, where you have the same group of people meeting there and talking about the same things. This group has allowed a lot of people to kind of get different mix of information and exposure to different people. 

Robert Leonard  17:49

How has the brokerage that you created and being a broker helped your real estate investing personally? 

Willie Mandrell  17:57

It’s helped a lot. I mean, a lot of the brokers that end up coming to the Mandrell company, or investors themselves. I mean, that’s that’s our focus. We’re not your typical brokerage, where we go out and we kind of market ourselves as your everyday agents. We don’t really do a lot of condos or single families, our focus is the investment property, multifamily space. It’s how we put ourselves out there and how we market ourselves. 

Willie Mandrell  18:20

So as we’re looking at assisting clients and buying their first multifamily, a lot of our agents are also investors themselves. It provides them the ability to go out and say, Look, I’m not trying to sell you something, I’m crunching the numbers, I’m familiar with this. This is the neighborhood I live in this neighborhood I’ve invested in this pro forma looks good. And you should probably hop on this investment. The second piece is there’s a lot of opportunities that come to our agents through the office. 

Willie Mandrell  18:44

And I get phone calls saying “Hey, well, I have a deal that’s on the table. Would you like to hop in this deal with me, instead of us taking a commission? Let’s just buy directly from the seller negotiate something.” And we put this into our portfolio. So I would say four or five. We sold a couple of properties just recently, but I’ve invested with upwards of 10 agents within the office as partners on deals as well.

Robert Leonard  19:06

I know you mentioned it briefly a few minutes ago, and a lot of people ask if they need a real estate license to invest in real estate. So let’s dive into that a little bit deeper. What do you think? Do people need a real estate license to be a successful investor?

Willie Mandrell  19:19

There’s two sides of that. One is if you have your real estate license, there is a lot of liability to you or on you should I say you must disclose that you’re a real estate agent. You’re a person of knowledge or personal privilege in that particular situation. So you talk to a seller and the seller, you know asking for something where you’re like, “Hey, this might be a good deal or good to fit my portfolio.” You now need to disclose it. You’re a real estate agent. 

Willie Mandrell  19:38

You’re on kind of the sellers now on alert. Versus if you’re not a licensed professional. You sit down you have a one on one conversation, it’s a little bit easier. The upside to having your real estate license though is access to information quickly right? Here in Boston, you have the Suffolk County Registry of Deeds. Anybody can go out and look at property deeds and see who owns a piece of property. But having my real estate license and having access to MLS allows me to do it with a couple clicks of a button. 

Willie Mandrell  20:05

I punch in an address right from my home computer, and it spits out various information to me. So I would say that it’s a give and take, you don’t need to have your real estate license to be a successful investor, I know plenty of investors that don’t have their real estate license, but it can be a you know, it can be an added benefit. The other trouble that you’ll have is if you get your real estate license, and your real intention is to just be an investor, it may be or it can be difficult to find a brokerage to hang your license with. 

Willie Mandrell  20:31

If you’re basically telling that broker, I have no intention of selling real estate, I just want to buy my own stuff. But I want to take my liability and put it off on to you as a brokerage without earning you a commission, that’s a tough sell. So it takes some digging to find a broker that’s willing to take you on if you’re just trying to be an investor.

Robert Leonard  20:51

Yeah, that last piece is really important. And it’s actually one that I don’t think we’ve heard here yet on the show, because I asked quite a few different people about this. I’ve heard varying opinions. I like getting different opinions for everyone in the audience to hear. Weigh those different opinions and make a decision themselves. But that last point you made about being able to give your license, because when you’re an agent, you have to go through a brokerage and their license is with a broker, for those who don’t know, and a lot of your liability actually goes through the broker. 

Robert Leonard  21:16

And when you’re selling a property, it’s actually the broker selling the property, and you get a commission for bringing them the deal, you’re not actually the one, like really procuring that deal, you’re not the one with the liability, it’s the broker. So there’s a lot of liability for them to hold. And especially if you’re just not really practicing, you don’t know all the ins and outs and you’re trying to do your own deals, that can be a lot of liability for the broker to take on, especially when they’re not really making any money on you. 

Robert Leonard  21:42

So I think that was a really good point that you brought up that not a lot of people have so far on the show. Now, I want to dive into your personal investing journey a bit more. Tell us a bit about how you actually got started, what was your first property that you bought?

Willie Mandrell  21:56

The first property was a two family. two family right outside of Boston, just south of Boston. That was a 2006 was my personal residence as well. Got into it with an FHA loan, great program. For those of you who kind of just starting out. If I can take a quick side note, if you are someone who is looking to get into real estate, but you don’t own rental property yet or you don’t own a home yet, though you may not want to live with your tenants or live in a multi family life. 

Willie Mandrell  22:21

Because that was my situation on my wife’s right. She said, hey, look, I don’t really want to live with other people, we’d make a decent income, let’s just go buy a single family home, I would encourage you to make that first purchase a multifamily live there temporarily, only or go get something else later. FHA allows you to go in and buy a multi family home at two or three family four family home with minimal down three and a half percent. 

Willie Mandrell  22:44

You can now take that and once you’re ready to move out, if it’s a year down the road, take your unit, your personally occupied unit, rent that out. And now go buy another single family with minimal down maybe 5% If you’re still holding the FHA loan. So that’s exactly what we did. But we actually took it a step further. So the first one was a two family. And then my wife and I both got out of college. And you know, she’s moving around, I’m moving around. 

Willie Mandrell  23:11

And I told her I was like, look, let’s I know you don’t really want the multifamily lifestyle. But this is a really cool way for us to kind of accumulate a few properties here. So we weren’t married at the time, she went and bought her second home not too far from here, or next town over a three family with 5% down. I did the exact same thing and other three family with 5% down. Now we own eight units, right? Now we’re married now we’re looking at a few years later, jobs are settling, subs settling in. 

Willie Mandrell  23:39

And now we go by the single family with 5% down as well. So now we own eight rental units and a single family all with very little out of pocket. So I would encourage most people in there, especially when there’s a beginning, ask as many questions of your mortgage broker as possible. Really understand the lending side of things. And Rob, one more thing in there. 

Willie Mandrell  24:00

HGTV and a lot of the TV shows give out this is me as a real estate investor talking as well, this image of a couple sitting down at a table and they’re shaking the keys and they just say, hey, we just bought our first single family together, I bought our first home together, what they won’t tell you and what the mortgage broker doesn’t tell you is that if you from a debt to income ratio standpoint, or from a liability standpoint, that mortgage now is both tied to that husband and wife for those two individuals, that young couple that bought that home together. 

Willie Mandrell  24:26

If you can buy a home on your own, as the wife or as the husband or as a young couple, you should certainly do that. If you need both incomes do that. But if you can buy a home on your own, you should certainly do that freeing up the other person to go buy an additional asset later on.

Robert Leonard  24:42

Yeah, I really like that strategy as well. I think it’s a great way for new investors to get started, especially if they don’t have enough for a 20% down payment if they live in an expensive market or even if they don’t just 20% can be a lot of money for a property. So if you want to get started investing in real estate, that’s a great way to go about it. So how did you get from there to scaling to where you are now to having over $10 million in your portfolio?

Willie Mandrell  25:06

Once we had the two threes, the two family, the single family, things get a little bit more tricky, right? You go back to a conventional lender and they say, no, no, no, you’re a real estate investor at this point, right? We’re not gonna give you any more conventional financing. So at that point, I start reading about little bit more creative tactics, commercial lending. I understand that I don’t have 20 to 25% down. So you start getting a little bit more creative and that’s when I stumbled across bigger pockets and the BRR strategy or BRRR strategy, which is the buy rehab, rent and refinance. 

Willie Mandrell  25:39

Great, great strategy. And I’ve been using that ever since. So what that is, is, we no longer go out and buy what we would describe as rent ready properties or market ready properties. We go out and we buy things that need an extensive amount of work. Not everything is this clean. But just to give you a kind of an idea of what we’re doing here in Boston today, in 2020, we’re buying properties, we try to buy them somewhere around 55 to 60 cents on the dollar. 

Willie Mandrell  26:04

So we’re going out and we’re looking for stuff and no, when I say that a lot of people thinking how are you possibly buying 50 properties that cheap. We’re going out and looking for waters coming into the windows are bad, their heating systems are fried. It’s not livable, right? We’re going in there, and we’re probably going to put $200,000 into the property. And at that point, the after repair value, we’re into it for roughly 800,000. So 600 purchase price 200 in and I’m making numbers really, really clean, because obviously there’s financing costs and holding costs and everything else. 

Willie Mandrell  26:35

Properties not worth a million. We can go back to the bank and refinance the whole loan, probably do that with a hard money lender, we’ll go back and get traditional commercial financing for an 80/20 split. And now we can go back and pay off our hard money lender, we have an asset that’s worth a million dollars of ARV, and we owe $800,000 on it. So if I can clarify that if I can look at it from another angle, most people look at a million dollar property and they say I have to put 20% down or $200,000 down. 

Willie Mandrell  27:04

We reverse engineer it and create our equity, right? We’re buying it’s super cheap, putting money into it and knowing that it’s gonna be worth more money than what we put into it at the end of the day. So that’s the BRRRR strategy. And that’s what we’ve been using ever since.

Robert Leonard  27:18

So what do you say to someone who’s listening to that? And hears those numbers, $600,000, $200,000, $800,000, a million? And they’re just like, Oh, my God, that’s a lot of money. I don’t have that kind of money. How can I do these types of deals? How are you able to fund these types of deals?

Willie Mandrell  27:33

So I would say don’t get intimidated by the numbers, my strategy and my formula is no different than another market, right? I mean, those numbers are the same thing as $60,000, $20,000, and $100,000 in another market, right? It’s just a formula. You could be in a completely different market. It could be 6 million, 8 million and 10 million, right? Don’t be intimidated by the zeros. At the end of the day, everyone is going to have their own particular market, you just have to know your numbers. So how do we fund that? 

Willie Mandrell  28:00

We absolutely don’t have a ton of cash to play with. My wife and I, we have two kids. We have our own mortgage, we have some other obligations. I would encourage new investors, this is kind of further down the road, right? Don’t worry so much about this right now until you have exhausted your conventional financing options first. But now we’re using private lenders. So your private lender initially would start off being your uncle or your aunt or your cousin or someone who has given an example private lender typically is I’m a doctor or lawyer or a business owner, and I work 90 hours a week I work something crazy. 

Willie Mandrell  28:34

And right now I really I understand that the stock market is taking a little bit of a dip, and I want to get my money somewhere else, I want to get my money invested somewhere else, I don’t want to just leave it in cash, I know I need to invest, but I don’t have the time to go out and look for real estate investments. So I know my cousin or nephew or Willie or you know whoever Willie is, has the ability to go out, knows the markets been a broker knows the investment side really well. 

Willie Mandrell  28:58

So the conversation starts in me presenting to them or them presenting it to me, but we go out and we will borrow let’s call it $100,000 from uncle and you’re gonna pay uncle 12% on that cash, or whatever you agree to the beauty of private money is really comes down to. Your uncle is acting as a bank, but you and your uncle permanent terms, it could be 4%, it could be 12%. His loan could be for one year, it could be for two years, we take that private capital, and we use that capital as a down payment for a hard money loan or a commercial loan or whatever it may be. 

Willie Mandrell  29:30

Once we’ve rehabbed the property, we’ve done our renovations, we’ve rented it. It’s fully leased up the property is worth significantly more than what it was when we bought it. We’re now able to refinance, pull cash out, pay off the hard money lender and pay off my own goal. So do I get any money out of this? No. Cash wise, no, but I’m left with an asset now. And to go back to my numbers that’s worth $1 million. I only have a commercial loan on it for $800,000. 

Willie Mandrell  30:00

So again, you can do the same thing, this borough strategy works in a neighborhood where the purchase price is $60,000, and the rehabs are $20,000, and the after repair value is $100,000. Works the same exact way. Now you’re just borrowing instead of $100,000, maybe it’s $10,000, or $20,000, from your uncle. And then from there, it kind of expands. An uncle tells auntie and uncle tells his his co worker, then you have a network of five lenders that you can tap into, and continue to do deals with.

Robert Leonard  30:26

And I’m sure you’re networking group, and being a broker and having your own brokerage, all of that I’m sure leads into having private lenders, private investors invest with you. So it’s really just immersing yourself in the real estate world, doing these types of things, going to networking events, starting your own networking group that will lead to these connections that can give you private lenders. So why have you decided to stay in the Boston market rather than going to other markets across the US where you could probably find more affordable deals?

Willie Mandrell  30:57

That’s a two part answer. One my stay in the Boston Market, because I know inside out these value of properties. When you know, it’s when it’s your backyard, I can do a lot less due diligence, because the formula is already there. I know that your average three family within and again, I actually have a super narrow focus. And this is not for everyone. Some people like to invest out of state and teachers, oh, no, I just encourage you to have your niche. 

Willie Mandrell  31:20

But I actually only invest within three neighborhoods within Boston. So super focused. And that allows me basically to say, you know, when a property hits the market, and you give me a few statistics, right? You tell me what the rent numbers are, you tell me the bedroom count, you tell me the square footage, tell me the particular neighborhood. I can put a value on that with very little due diligence. What that allows me to do is it allows me to move a lot quicker than most investors, right? You tell me you present me with a deal. 

Willie Mandrell  31:45

It’s not going to take me two or three days to submit an offer to you. It’s going to take me maybe a couple hours to Google Earth it. Look at the next area. Conservatively, I can give you an offer without walking through it. In many cases, if the numbers are a little bit tighter than maybe I need to get in. But I can move a lot faster than most investors because I know my market so well. The second side of that is Boston specifically this is not to knock anyone else or anyone else’s investment strategy, but it’s a really strong market, right? 

Willie Mandrell  32:13

So right now we’re, we mentioned we’re in April 2020. Coronavirus is among us, the stock market is taking a little bit of a hit. We imagine that because of that, the real estate market is going to take a little bit of a hit as well. And I feel like Boston is a very strong market in terms of the economics, right? When the rest of the country is saying we’re down on real estate values 15%, 20%. That’s not necessarily the case in every single market. 

Willie Mandrell  32:38

Boston doesn’t experience with the rest of the country does. We have some of the best institutions, some of the best hospitals. Harvard, MIT, you know, Northeastern, some of the biggest schools, here are some of the best schools here as well. We have students coming from all over the world, people coming from all over the world, and they tend to stay here. So we have a growing demand for housing. So we don’t necessarily experience the exact ebbs and flows of the rest of the market. 

Willie Mandrell  33:02

So that’s the two prong answer is because I really know the market and choose because I really believe in the longevity of the Boston Market. 

Robert Leonard  33:10

Yeah, we actually had Brandon O’Neil on the show a couple episodes ago, and he talked about the same idea. He only invests in a handful of neighborhoods in the Houston area. He only buys one type of property within 200 square feet, if it’s any bigger, any smaller, he’s not interested. It has to have a very similar floorplan, everything has to be very similar. And there’s so many that he has plenty of deal flow, but he’s very specific. He knows exactly what he’s looking for. And that allows him to not really spend a lot of time on it and still be able to find great deals.

Willie Mandrell  33:40

Right? No, absolutely. And again, it feels kind of silly sometimes when I do it. But I don’t do a lot of due diligence. I mean that the formula is there. I know it’s gonna work because it has already worked. I mean, people do all these fancy spreadsheets and everything. And again, if you’re new to the business, I encourage you to do your numbers. I know what it costs for water, I know what the insurance provider is going to charge me, I already know what I’m going to have to pay roughly in taxes already based on the square footage based on the neighborhood. 

Willie Mandrell  34:05

So yeah, just having your particular niche is very powerful thing because it allows you to kind of just go with the flow and kind of build. The problem that you have is a lot of you know investors get to a point where I am, and they get bored. And I can’t remember I read it somewhere or heard it somewhere but you can either be or entertained or rich and a little bored. When you do the same things over and over again, it does get repetitive and people’s look for the next shiny object. 

Willie Mandrell  34:29

They start saying hey, I want to go invest in tax liens. And I want to go build condos. And I want to do larger development. People ask me that all the time. Why don’t I ever want to get to building 20 unit buildings? Yeah, it’d be nice if something fell in my lap. But I mean, there’s a lot of due diligence. This is a lot of extra municipal stuff that comes with that. If I stay in my niche, I can scale very, very quickly. Do the same thing over and over again. It’s boring, but it’s going to be successful at the end of day.

Robert Leonard  34:57

Yeah, it seems a lot of people are always looking for the next exciting thing. Whatever it is, and that’s not even just in real estate, that’s with the stock market, that’s with side hustle. That’s with even corporate careers, even relationships. People are always thinking the grass is greener on the other side, right? And looking for that next best thing. And it very rarely turns out to be the case, you’re usually better off sticking with what you’ve been doing what’s been working well for you.

Willie Mandrell  35:20

Absolutely. I mean, I remember when Bitcoin was a popular thing, what still is a popular thing, but everybody’s like, yeah, I want to get into Bitcoin. I mean, it works for some people. And I know you’re some of your listeners probably like I own a bunch of Bitcoin. And it’s probably been really successful for you. But I didn’t know it. I don’t understand I still to this day, don’t entirely understand what cryptocurrency is, that kind of stick with what I know. And just do it over and over again. 

Willie Mandrell  35:41

And I’m a big believer in the idea that you can learn something, hopefully this makes sense, but 80% of something right, be somewhat successful. But I think the real money is made in those real small nuances, the last 10%,15%,20% of something, and you really get to expert level. When you’re able to do that, that’s when your success just kind of Excels and just kind of snowballs that point, and that’s really what I’m trying to get to. I think I’m on the verge of kind of just being able to scale, and it’s one of the reasons I’ve been able to take on as many partners as I’ve had. 

Willie Mandrell  36:10

And even through this pandemic, where everyone’s kind of home, I am still able to kind of assess properties and look at deals because I don’t really necessarily need to be on site to look at these things, you kind of know the numbers inside out.

Robert Leonard  36:22

Yeah, there’s actually a quote that I really like. And I’m not I do not remember it by any means. But it talks about how you need to work on something so that you can become world class at it. Because if you’re not, there are people out there that are and how do you plan on competing with them, if you’re not going all in on that one thing when all your competition is? So you got to think about it that way. If you’re going in on a specific thing in real estate, but you’re trying to do a bunch of other things, there’s other people that are only doing that one thing. 

Robert Leonard  36:47

Like there’s people like you. If somebody tries to come in and compete with you, in your area, your neighborhoods with your types of properties, they’re gonna have a tough time, if they’re trying to do 10 different things. Whereas you you’re focusing on that specific thing, you know it well, you know it better than them, and you’re probably going to be hard to beat for those people. And the same goes for everything, whether it’s real estate, stock market, whatever you’re working on, it’s the polling is valid.

Willie Mandrell  37:08

Absolutely. I mean, and that was the case in 2009, 2010, when I was trying to invest. There was a lot of experienced investors that were, that I was competing with. I was on the newer side and kind of competing with them. And you’re talking about 10 years later, I’m that guy now that’s sitting in the market that’s very difficult to compete with. One of the things that I would encourage you know, listeners to do is, I think people come into this business, and they come into a lot of things not knowing whether they’re going to be successful. 

Willie Mandrell  37:31

So they come in and kind of dip their toe in the water, and they want success. I always give people the analogy is kind of like LeBron James player, one of the greatest basketball players in the world. The LeBron James would never say, “Hey, when I make it Pro or make it to the NBA, then I’m going to start working out, that I’m gonna start investing money in my body.” It’s the other way around, you have to put the time and you have to put the work in to make it pro. 

Willie Mandrell  37:50

People want the success before they kind of want the work to put the work in, right? So you have to go out and tell everyone what you’re doing. Don’t be afraid of putting it out there. I don’t think there’s anyone that knows me and those named Willie Mandrell, that doesn’t immediately associate that with real estate investing, or Boston real estate, right? It’s what I do. It’s what I made up. And that’s part of why I’ve been successful is because of that dedication that I don’t stick my toe and I basically went in all in and said, this is who I am, this is what I want to do. 

Willie Mandrell  38:15

So when opportunities pop up, I don’t think there are too many days where my phone doesn’t ring or I get a text message about somebody that has a deal or has an opportunity or something in real estate, that they’d like me to take a look at it. That’s where success comes. It’s just kind of just going all in and just going after it if that’s something you really want.

Robert Leonard  38:33

For someone listening to the show today, who’s new to real estate, learning, all of the information that we’ve talked about throughout this episode is going to be very beneficial. But now they need to go out and actually put it into action to really see results. So what is the first step someone should take after finishing this episode to get started on their real estate journey?

Willie Mandrell  38:54

Figuring out what you want. I mean, I think that’s the other thing, most people don’t really understand what they want. They think that hard work, or posting up something on Instagram or Facebook is gonna mean that they’re actually out there on their grind, and they’re actually putting in work, I think that you need to step back and you know, put some things on paper, the idea that we’re investing in real estate to be real estate investors to have success is false. 

Willie Mandrell  39:16

The number one thing or the reason that we’re here and anybody’s trying to be successful is so that you can provide and live a certain lifestyle. So I think that you first need to figure that out. The first thing that you need to do is figure that out. What type of house do you want to live? What type of cars do you want to drive? What type of school do you want for your children? How many vacations do you and your spouse want to take a year? What is the lifestyle that you want to live? 

Willie Mandrell  39:35

You can paint that perfect picture in your head and say, you know, put a monetary value to that right? I basically said, “Hey, these are the things that I want my life and this is how much money I’m going to need to get there.” And I took it a step further. And I said basically, I think a lot of people do that. But then they say going to work to get there. I basically said what I want to do is I want to create enough passive income to live that lifestyle. I determined basically that I needed a certain number of properties.

Willie Mandrell  40:00

The plan is not going to come in a day, it’s not going to come in a week, it takes time. And I think you’re gonna revise it year after year. But I think it needs to be in place. I think you need to put something on paper, whether it’s just you and your significant other or just you sitting down and saying, here are the things that I want to achieve in the year 2020, despite what’s going on. Here are the things that I want to achieve in five years, and just kind of put something on paper. 

Willie Mandrell  40:20

I think that’s really what it comes down to people kind of just start January 2020, and say, Hey, this is going to be my year, and they work really hard for 60 days, and then kind of just fade out. I think you really kind of just need to commit yourself to something, whether it be buying your first property or buying your next three or whatever it may be, put it on paper and own it. 

Robert Leonard  40:39

Willie, thanks for sharing your story and all the knowledge that you’ve gained over the years. For those interested in learning more about you where’s the best place for them to go?

Willie Mandrell  40:49

You can visit my company websites mandrellco.com, it’s m-a-n-d-r-e-l-l-co.com. If you go to backslash coaching, we provide a 30 minute conference call 30 minute mentoring, and consulting call for anybody who’s interested in kind of talking that need some coaching and mentoring some help through their real estate journey. If you’re local to the Boston Market, you can absolutely join Boston wealth builders. It’s bostonwealthbuilders.com. 

Willie Mandrell  41:16

Free membership you join, you have access to all of our rehab tours, our webinars and any other educational information that we put out there. We’d love to have you as part of the group. And then like I said, my information is on that company website, mandrellco.com if you want to reach out to me directly as well.

Robert Leonard  41:31

I’ll be sure to put links to everything that Willie just mentioned in the show notes. You guys can go connect with him there. As always, I’ll also put links to various different books that cover the topics that we talked about today. So if you want to go read those books and dive into them deeper, you can do that by using the books in the show notes below. Willie, thanks so much for joining me. 

Willie Mandrell  41:50

Rob. I appreciate you having me. 

Robert Leonard  41:52

Alright guys, that’s all I had for this week’s episode of Real Estate Investing. I’ll see you again next week.

Outro  41:58

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